Editor's Three Key Takeaways:
- You can make transitions in your career and academic choices anytime. You can always self learn enough to pursue something.
- Good PR is a great driver for early stage businesses.
- Careers are about the constant drive to look for opportunities: to learn and exercise your skills as much as possible. It is not always about scoping into your "passion" area.
Adam Stein graduated from the University of Pennsylvania Wharton School of Business in 2005 with an MBA in Marketing. After graduation, he and co-founder Tom Arnold spent the next five years building TerraPass from the ground up. After a short break, they got together again and began building Gridium six years ago.
TerraPass provides carbon offsetting products helping individuals and businesses reduce their climate impact. Gridium makes software tools and platforms for modern buildings. Some of the tools include energy consumption data analytics and visualization, and maintenance tracking platforms.
Editor: TerraPass was the main topic of discussion during one of the lectures for one of my classes this semester, Product Design [OIDD415]. This is the same course that I talked a lot about during my interview with Facebook data scientist Alexandra Ressler. My interests in sustainability and consumer behavior motivated me to reach out and find Adam through the Penn Alumni Database, and he was surprisingly enthusiastic to share his experience. His aptitude towards recognizing opportunities and his inclination towards learning and building things allow him to bring a great perspective for anyone considering a career path in building products and entering new industries. It was also super rewarding for me to put a face and voice to what I learned from the lecture.
What did you do before your MBA at Penn?
Basically, I've been working in technology for all of my post-graduate career. I actually fell into it unintentionally as I was a Biology major in Stanford. At one point, I thought I was going to go get a Ph.D. in Biology and be a research scientist. It wasn't until towards the end of my senior year that I realize I not want to pursue that path. I should have probably thought harder about it sooner. But when I did take some intro computer science courses my senior year, I ended up enjoying it. So after graduating, I got a job at school working in the Medical Informatics Department, a sort of the bridge into computing. It was a lucky time to make that transition. It was in 1996, Netscape was recently released. Everything was blowing up. Despite the fact that I was kind of under-qualified and clueless, it actually wasn't that hard to get a job.
This just goes to show that you can make transitions anytime.
That's what took me to Trilogy and gave me a great experience for getting a close up view of basically what a successful startup looks like: both good and bad aspects of that. I certainly had no prior understanding of startups in general, venture, any of these things that college students are probably much more naturally tuned to these days. Even though I went to Stanford in the heart of Silicon Valley, it wasn't part of my undergraduate experience. It was all very new to me. So after about three years at Trilogy, I went to TellMe which was another hot startup, truly in Silicon Valley not in Texas. I also transition that point from engineering to product management, which I got a feeling was my truer passion.
Editor's Note: Based in Texas, Trilogy is an enterprise software company that automates front office functions. Adam got to work with clients such as Lucent and General Motors.
What got you excited and why did you decide on an MBA?
I enjoyed aspects of engineering; but what really got me excited was trying to solve problems for people. This involved a more holistic set of skills than coding. It involves talking to users and thinking broadly about the context of what they do day-to-day. There are also elements of interface design. These kind of things that I was most enthusiastic about. So TellMe was an opportunity to transition to product management. I did that for several years and then kind of burnt out. And that's where I was just before Wharton. I actually took over a year off at that point and traveled, a lovely self-indulgent thing to do if you ever have the opportunity to do it right, I say go for it.
Editor's Note: TellMe provides advanced telecom services to Fortune 500 companies, including AT&T, FedEx, and Merrill Lynch.
Where did you get a chance to travel?
I spent six months in South America, so probably two months backpacking in Patagonia. I worked my way up, and spent a while in Ecuador. Then, I came home, applied for an MBA program and as soon as the application process was done, I took off again and spent another roughly six months or so of riding a bicycle across Southeast Asia and China.
You started your first venture in school. Could you give me a quick summary as to what you think Terrapass was when it first started?
Editor's Note: Adam's first venture emerged straight from the Product Design [OIDD415] class. Professor Ulrich spent the majority of one semester bragging about Terrapass.
So Karl's class has changed over the years, and ours was the very first version of it. In this version, Karl came up with the basic idea. So that doesn't mean he designed the product or the go-to-market strategy or all of the other things that we have to do. The core of it was carbon offsets for consumers and that was handed to us. So that was the idea, we did stick with the idea, we didn't throw it out and start all over again. We did have to figure out what the product was going to look like, etc. We spent nine weeks or so figuring that out. I was on the marketing side, but it was a lot of fun. It was a timely idea. There was some unwarranted optimism at the time. There was going to be action taken on climate change. But unfortunately, climate change was a very boring thing for journalists. But we had a nice hook. They liked to write about us because it was a more consumer-oriented angle that was easy to write a cute story about.
We very quickly found ourselves getting pretty amazing press coverage very disproportion to our size and maturity. That was a great driver of the company.
Were there any additional classes or resources on campus that really helped you?
No, I don't think we rely very heavily on other resources. I can imagine doing so if the product itself was more complex, but there wasn't a lot of you know physical design. There wasn't a lot of complicated technology either. Some of the complexity was around sourcing the product. It's quite complicated: understanding the carbon markets. But that was not knowledge that really existed anywhere on campus. It's not like Penn had a department in carbon markets. So that was something we had to develop in-house. It was a fun and intellectually engaging project: carbon markets were new. They combined environmental goals, economic theory and policy in a way that if you happen to be interested in those kinds of topics were lot of fun. So you really just self-taught. I ended up actually doing quite a bit of writing about our markets for general public. That became part of my job description at Terrapass. This was before content management was really a thing. But I guess it was an early form of content management was helping to translate some of these concepts to the general public.
Was there a defining moment that you realized that your idea really had potential?
It got increasingly interesting after graduation. At that point, it was a very small thing and it was not clear that it could ever be more than a very niche product which arguably is what it actually became. But it was growing in a manner that suggested that there might actually be business there. So no I don't think there was a eureka moment. I think there was steady progress.
Can you talk a bit about the highlights and lowlights of the entire process of Terrapass? What was the partnership process like?
We did end up landing some big partnerships that really drove growth, certainly the most meaningful one was the partnership with Expedia.
How was that done?
It fell into our laps.
They called. I remember picking up the phone one day and it was them. They were interested in potentially bundling us with airline ticket sales and that came together very quickly. It was successful beyond anything we had imagined. There was the traffic was so disproportionate to anything we've ever seen before and it was a very successful program.
There was also another sort of interesting highlight that quickly became the lowlight was when we were, we became the gift bag for the Academy Awards one year. It was 2006 maybe and they got involved in some controversy because they were giving away overly expensive gift bags to these very wealthy celebrities. And there was some sort of tax implications that they were not properly dealing with and people thought it was somewhat unseemly to shower these wealthy people with high end luxury items. So they decided to do this environmental gestures, which was kind of a fun bizarre project to work on. But also painted a huge bulls-eye from a press standpoint that kicked off some backlash that went into a very critical and also incredibly poorly researched articles that became a big PR disaster for us. So it was a very interesting experience certainly all around, highlight and lowlight.
How did you manage to sell such a premium good to consumers? Was it difficult changing consumer behavior?
At the end of the day, it was a niche product. We never grow the category to the point where Terrapass was going to be a large business. It appeals to a small self-selected group of people who are engaged on this particular issue. We did a good job of reaching as many of those but it wasn't a large market.
What drove Terrapass?
Certainly early on, it was primarily driven by PR. So that's a nice when you are PR worthy but it doesn't apply in many cases to a lot of companies. Some companies are more masterful than others at generating their own PR. We were early in content marketing. We basically wrote a lot of stuff and syndicated all over the place. We were somewhat geeky policy nerd types and we spent a lot of time getting pretty deep in the woods on these topics and we enjoyed it.
How did you guys deal with environmental regulations?
This is a complex area because at the time, when we started there were no regulated carbon markets, if I'm remembering correctly. There was only the voluntary markets, but there was clearly a lot of activity around this issue and the thought was that there would soon be regulated carbon markets, hopefully a national one. Certainly there was regular ones in Europe. So the thought was that this would actually happened in America. We ended up seeing was sort of a patchwork of regional ones and we pay a lot of attention because there was this opportunity and risk. We were sort of amassing our own portfolio of these things. And the concern was that their value could basically be really wiped away if the regulations broke in a way that's sort of rendered useless. And certainly there was a lot of private companies who were starting to participate on the voluntary markets on the theory that these things would not be worthless. But this is a lot of kind of reading the tea leaves and paying attention to draft legislation and paying attention to these markets and just trying to stay ahead. But it looks like things might be moving. As it turns out they kind of move nowhere, I mean the national market never came to be. And I actually am just disconnected enough down from this world that I don't know the latest state of the various regional markets are.
Certainly, the price never got very high because of the natural gas boom. The caps that were being set were too loose. So there was a lot of slack in the markets. This is probably an overly technical answer to your question. Basically it was a very complex regulatory landscape. And if there's anything I learned at Terrapass, it was to try to avoid that situation.
Did you end up recruiting for a lot of things that MBA students normally recruit for?
No I didn't apply for any jobs.
For that recruiting week, I went to Baja Mexico and looked at whales.
It was probably not the most well considered way to approach my job hunt. But I was not interested in sort of consulting or finance track, so I kind of winged it.
Why is that? What about consulting and finance that didn't attract you?
Finance, looking at it, I wasn't qualified. If it were my dream to go into finance, I could have made that transition at Wharton. But that was not my goal. Consulting, I certainly could jump into. That seemed like a step in the direction away from what I was trying to do, which was find work that really engaged me. Not that I think consulting is necessarily inherently terrible. It seemed like long hours working on project that was probably just work. It wasn't what I was looking for.
Can you talk a bit more about what your MBA meant to you?
Well the truth is I actually went in looking for a career change. I was interested in development economics and went to do an MBA program because I was advised to. It's a terminal degree you get it after two years. It offers a lot of flexibility after that and rather than going to graduate school. That made sense to me, but obviously did not end up going into development economics. I did discover that I enjoy technology, which I do like and enjoy, and there were opportunities to address causes that I cared about, while retaining the flexibility and speed of a startup culture which I generally enjoy.
Could you talk a bit about your relationship with your co-founder Tom? How did you meet him and why did you decide to work with him?
We knew each other socially at Wharton. And then we also took this class together. Tom was on the sale side for the class. He was very passionate about the project, and I think he had a lot of natural leadership abilities. He's the one who became the chief, while we were still in school for the next quarter. Mostly, he pushed it forward. There was a time where it was a one-man show. There was not really enough of anything to sustain much in the way of operations. When things got more stable, I came back in. I mean we worked well together. We have a very similar set of priorities. And a common view sort of how to build a great company. And at the same time we have a complementing set of operational skills: whereas Tom is very sales and finance driven, and I am very product driven. It's a good partnership because we tend not to conflict on big picture stuff and made meaningful contributions in different areas.
What are you guys working on now?
So the story now actually grew very directly over our experience at Terrapass. We both wanted to get closer to the energy saving side of thing.
Carbon offsets are a financial mechanism and we want to actually get closer the projects themselves. We're both interested in buildings. Buildings use about 40 percent of the world's energy. A lot of the attention goes to transportation. Transportation is certainly sexy.
Buildings are from the technology standpoint decidedly unsexy. They're pretty old school. They are two tubes of pipes and ducts.
And they tend to hang around for decades or even hundreds of years and they're just not on the bleeding edge. And so it seemed like there was an opportunity there. So we were both having thoughts along these lines, without even really having to discuss with one another.
What does Gridium do?
Editor's Note: After Adam and Tom left Terrapass in 2009, they both went separate ways before coming back together in 2013 to found Gridium.
We do energy data analytics. We take data from smart meters, new digital upgrade from the old analog meters. That became actionable information for property managers so they can understand and reduce their energy use. Smart meters are fairly new on the scene but basically instead of getting 12 energy data points a year in the form of your monthly bill, people now get 35,000 per year, because smart meters takes reading every 15 minutes. That's both wonderful and also overwhelming to your typical property manager and we saw an opportunity to take a software based approach to energy efficiency. One of the big hurdles of energy efficiency is usually there's an upfront cost and then there's a payback over several years. Even if the payback is there, it is often hard for building operators to bear those upfront costs. We were excited about the Software-as-a-Service (SaaS) model, which when we started Gridium wasn't new but definitely wasn't as dominant as it is now. We saw the possibility of bringing no upfront costs, low ongoing-fee service model to energy efficiency and that's what we did.
Can you describe a typical day for you at the office?
It's a little different for me. I spend most of my time with engineering team. Even though I'm not an engineer and I don't officially manage them. We have a development lead that is the team with whom I had sort of sitting down day-to-day working together with them on build our product. What I do on a given day, depends a little bit of where we are in our product lifecycle, but we are now releasing all the time. So I'm also doing a little bit of everything. I will be doing product specifications where I'm working with a designer to basically spec out how the product would behave or what the product would look like. I do bunch of customer interviews, where I work with existing users or colleagues to figure out what's working well for them, what's not. I am doing the testing. Certainly, life in a small software startup, mean we don't have a lot of dedicated Quality Assurance resources so often I'm the guy looking at what's being built and making sure it's actually behaving the way that it's supposed to, both in terms of finding bugs and also is it meeting our user requirements. I do a lot of everything else because I'm a founder is therefore I do a lot HR stuff and I chime in on deal strategy and try to figure out, huddle with Tom to make sure we we're not speeding down on our runway too quickly.
Any more advice you would give undergraduate or graduates right now?
There's probably a lot of focus on finding a passion when you're on the ground. For most people, that's probably not the most productive framework for thinking about your career. A lot of us aren't so lucky to necessarily work in a passion field but it's also a reflective understanding of what makes for a good job.
Essentially all your career you're going to be wanting to look for opportunities to learn as much as possible and the opportunities to exercise skills.
I worry about that sort of thing much more than the exact area in which I applied myself. Not that it's irrelevant or unimportant. In my career, I made a very explicit attempt to seek out areas to focus on that I found meaningful. That being say, there's probably a lot of different areas that I could have ended up. There's sort of happenstance involved, my path is pretty obvious to me. Karl assigned us a projects and that's how I ended up really determining much of the course of my post-graduate career. That's dumb luck. So it's more important to figure out what sort of skills you most enjoy exercising and giving yourself a good opportunity to learn from good people and connect with good people around that especially early on.
Disclaimers: The views presented here are solely those of the interviewee. They do not represent Trilogy, TellMe, Terrapass, Gridium or any of the other individuals or institutions named above.